Reasons for the exchange gap

The exchange gap can be explained by investors taking profits and the lack of fresh capital entering the market. When investors take profits, the price of a stock can move lower, leading to a gap in the exchange rate. Similarly, when the supply of capital in the market slows, the demand for a stock can decrease, leading to a gap in the exchange rate. When the supply and demand of a stock is out of balance for a prolonged period of time, a gap can form in the exchange rate.